What Would an Honest Budget Reply Look Like?

Tony Abbott likes to claim that he supports honesty in politics. But if he was coming clean with the Australian people, what would he say in his budget reply? Here’s one possibility.

Tony Abbott, the Honest Budget Reply

Last year, I had a bit of fun with my budget reply. We didn’t have much policy, so I reworded my speech to the Young Liberals’ national convention, and delivered it in parliament. But at the end, I said the thing that really mattered in politics was to be honest. That got me thinking – maybe I should really be honest. So this year, I’m glad to deliver my first ever honest reply to the Government’s budget.

The uncomfortable truth is that the Australian economy is doing well – really well. We’ve grown 13% since 2007 – while Europe’s economy has shrunk and over half all advanced economies haven't recovered lost output over this period. I was wrong when I said WorkChoices ‘was good for wages, it was good for jobs, and it was good for workers’, because productivity growth is higher now than it was under WorkChoices. The share market is up about 10% just since January. The level of expected business investment has never been higher.

We have one of the lowest unemployment rates in the developed world, and there’s few countries where you’d rather be looking for a job right now than Australia. Our net debt – as a share of GDP – is low. It is expected to peak at only 11.4 per cent of GDP, a fraction of the major advanced economies. My own personal debt to income ratio is over 200%, So if I start accusing the government of taking on unsustainable debts, I don’t know what that would say about my own ability to manage money.

Former Prime Minister John Howard – a man I deeply admire – put it well last week, when he told a Sydney conference: ‘When the current prime minister and the treasurer and others tell you that the Australian economy is doing better than most – they are right. We are still fortunate that we have an unemployment rate with a five in front of it. I wouldn’t have thought that was going to be possible a couple of years ago, and I don’t think many people would have. Our unemployment has remained pleasingly quite low. And our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries.’

Tonight, I pledge to stop trash-talking the Australian economy. Rather than fearmongering on the cost of living, let me be honest: our best measure of the cost of living is the consumer price index, and it’s been consistently low over recent years. Interest rates are down, so a family with a $300,000 mortgage is saving over $100 a week compared to when the Coalition were last in office. So tonight, I pledge that the Coalition will scrap one of our promises: the promise that interest rates will always be lower under the Coalition. It’s a pity that getting rid of this pledge won’t save me any money.

Which brings you to my funding gap. The Coalition has spent the last few years saying ‘no’ to responsible budget measures and ‘yes’ to special interests. The result, as Andrew Robb and Joe Hockey have admitted, is a funding gap that a year ago we estimated at $50 to $70 billion. But that was before global economic circumstances and the high dollar helped wipe $17 billion off government revenues in 2012-13. So our gap today is $70 to $90 billion. That’s thousands of dollars for every Australian household.

And then there’s my spending problem. As a result of ongoing, unfunded promises, Joe Hockey and Andrew Robb now have a mammoth task ahead of them to see how it all adds up. Because we remain committed to:

Billions in unfunded infrastructure commitments – around $18 billion at last count.

The only way a Coalition government could spend more, tax less and have lower debt than Labor would be if we repealed the laws of maths. In my initial conversations, the Greens Party have been supportive of this, so I think I might be able to get it through the Senate.

In 2009, I told Lateline that Labor’s stimulus package was ‘not going to stop the recession being long and deep’. In the years since, it’s become clear that government stimulus saved over 200,000 jobs, and ensure Australia avoided going into recession entirely. So my response has been to pretend the Global Financial Crisis didn’t happen at all, and complain about debt, even although I know that two-thirds of our debt came through revenue write-downs during the GFC. Would the Coalition have taken the budget into debt if we’d been in power when the GFC hit? Of course we would have.

Similarly, I’ve spent the past few months pretending that the revenue write-down didn’t happen, hoping I could muddy things up with my usual lines about Labor spending. But tonight, I want to be straight with you: in a budget, revenues and expenses are different sides of the ledger. The revenue write-down has nothing to do with government spending. Following the fall in revenue, I have no idea how I’m going to make my costings balance. Even my regressive parental leave scheme doesn’t seem to add up, because since 2010 wages have grown and company tax revenues are down. Do you think Coles and Woollies customers would mind if I raised company tax by a bit more than 1.5%?

As Peter Costello wrote about me in his book, ‘Never one to be held back by the financial consequences of decisions, he had grandiose plans for public expenditure.’ So in that spirit, let me tell you about some of the grab-bag of ideas that currently constitute Coalition policy.

First we have a $30 billion policy to construct dams. Yes, some biased and uninformed groups – like experts – have characterised the plan as ‘unfunded’, ‘uncosted’ and ‘barking mad’. But what these elites don’t get is that this policy is the voice of the Australian people. Every day, people come up and tell me to announce some damn policy.

Second, I’m proud to re-announce our $4 billion centrepiece saving: re-introducing the 15% superannuation tax on low-income Australians. I expect people will support this measure because, I’ve said before, superannuation is a con job. This tax increase will mean 3.6 million Australians have to delay their retirement – so it’s not just a saving, it’s a job creator. Central to the Coalition’s values are senior Australians and hard work. Making senior Australians work hard is our ultimate aspiration.

Third, I’m especially happy have the chance to talk about my Paid Parental Leave scheme. Now Alex Hawke may say that it ‘does not pass the fair-go test’, Mal Washer may say that he doesn’t see how it will assist productivity, and Peter Reith might have argued that ‘it is obviously bad policy’. But the one thing everyone agrees on is that it was my idea. So I’m sticking to it. This is because I understand the needs of Australian families: it’s not people on Family Tax Benefits that need assistance through things like Labor’s Schoolkids bonus, it’s people who are earning over $150,000 that we should be helping most. High income earners are the true women of calibre, and they deserve fair dinkum assistance.

Fourth, continuing in this vein of providing assistance to those of calibre, the Coalition if elected in September will ensure that Manly Football Club, which has never won the wooden spoon in its 63 seasons, the longest period of any current club, receives another $10 million in addition to the $1 million I got them in 2005 to create some undercover seating.

Fifth, the Coalition is committed to meaningful tax cuts. So meaningful, we can’t say what they are, who they’ll be for or how much they’re going to cost. I’ve said that I aspire to a lower tax to GDP ratio, but given that it’s fallen from 23.7% to below 22% under Labor, even the dries in my partyroom have started to ask me how much lower it can go. In fact, someone reminded me the other day that another 1% reduction in the tax to GDP ratio would be equivalent to slashing the entire schools budget, cutting almost all Family Tax Benefit payments, or axing three quarters of the defence budget.

Sixth, there’s the interweb. Some call me old fashioned, but I am proud to be a man who believes in tradition. I believe in Australia’s future as a constitutional monarchy, I believe that marriage should be between a man and a woman, and I believe in our decades-old copper wire. I’m no tech head, but I just don’t see the need to bring our technology into the 21st century. Personally, I get my staff to print out my emails and I dictate the responses and have them sent to the typing pool.

Seventh, we will use soil magic to mitigate that climate change thing. We call it ‘direct action’, because it directly acts to take money from the pockets of households and give it to big polluters. Households will need to pay $1,300 in new taxes annually in order to meet the $100 billion that the Grattan Institute said we’d need to put towards an abatement purchasing fund.

You’ll notice that there are a few things missing from this list. As I said in 2003, ‘Transport infrastructure is a state responsibility. The Commonwealth Government should no more have to fund … [it] than the State Government should have to buy new tanks for the army.’ So don’t expect me to follow Labor’s historic investment in roads, rail and urban public transport. And under cover of a Commission of Audit, I’m hoping to cut spending on ports too. The experts tell me this is my best chance of stopping the boats.

As Coalition leader, I have been described as ‘not a policy-driven person’ who ‘sees politics as a game’. But by being honest and upfront tonight I have shown the Australian people what kind of Prime Minister I would be. And frankly, even I’m kind of worried. Honestly.